What is a Ginnie Mae security?

By Investopedia Staff AAA
A:

A Ginnie Mae, or Government National Mortgage Association security, functions similarly to the process of lending someone money to purchase a house or business. Ginnie Mae buys home mortgages from banks and financial institutions, bundles them together, and then markets portions of these bundles to investors.

For example, if you invest $100,000 in a Ginnie Mae, you are essentially lending someone money to buy a house or business with the help and the guarantee of a government organization. You would receive monthly payments consisting of interest on the loan and perhaps also a portion of the principal. These are similar to the payments a bank receives when it lends money to a home or business buyer. If it isn't included in the monthly payment, the principal is paid back at the end of a specified time period.

Ginnie Maes are the most popular type of mortgage backed securities because they are guaranteed by the U.S. government. They are not impervious to risk, but the government will step in to prevent the collapse of Ginnie Mae and its securities.

To learn more, see Profit From Mortgage Debt With MBS.

RELATED FAQS

  1. What counts as "debts" and "income" when calculating my debt-to-income (DTI) ratio?

    It's important to know your debt-to-income ratio because it's the figure lenders use to measure your ability to repay the ...
  2. How does my debt-to-income (DTI) ratio affect my ability to get a mortgage?

    Find out how much your debt-to-income ratio affects your ability to get a good mortgage rate when buying a home.
  3. What are the best ways to invest in mortgage-backed securities (MBS)?

    Find out how you can start investing in real estate through mortgage-backed securities.
  4. Can I buy a house directly from Fannie Mae (FNMA)?

    Yes; you can buy homes directly from Fannie Mae. Fannie Mae (the Federal National Mortgage Association, or FNMA) is a government-sponsored ...
RELATED TERMS
  1. Forbearance

    A temporary postponement of mortgage payments.
  2. Mortgage Modification

    A permanent change in a homeowner's home loan terms that makes ...
  3. USDA Non-Streamlined Refinancing

    A mortgage-refinancing option offered by the United States Department ...
  4. No-Appraisal Mortgage

    A type of home loan used for refinancing for which the lender ...
  5. No-Appraisal Refinancing

    A type of mortgage for which the lender does not require an independent, ...
  6. No-Appraisal Loan

    A mortgage that does not require an appraisal of the property’s ...
comments powered by Disqus
Related Articles
  1. Financing Options For Buyers Of Foreclosed ...
    Credit & Loans

    Financing Options For Buyers Of Foreclosed ...

  2. 4 Steps To Attaining A Mortgage
    Credit & Loans

    4 Steps To Attaining A Mortgage

  3. ARMed And Dangerous
    Insurance

    ARMed And Dangerous

  4. Financing Basics For First-Time Homebuyers
    Home & Auto

    Financing Basics For First-Time Homebuyers

  5. 10 Hurdles To Closing On A New Home
    Insurance

    10 Hurdles To Closing On A New Home

Trading Center